Crypto Chronicle: October Oscillations

The crypto scene displayed a flurry of activity today, as the elusive Bitcoin (BTC) took a slight dip, resting at the figure of $28,732. On a parallel course, Solana (SOL) experienced a gentle descent, settling at a modest $24. Simultaneously, a host of alternative coins surged forward, reigniting the spark of optimism, a characteristic often synonymous with the month affectionately dubbed "Uptober." Intriguingly, both the crypto and equity domains sustained their upward momentum, culminating in an impressive cumulative crypto market capitalization of $1.1 trillion, marking the landscape on the auspicious date of October 17.

Crypto total market. Source: TradingView

Shall we delve deeper into the underlying currents that propelled today's rally within the crypto realm?

October experiences peak daily trading activity

Ah, October, a month steeped in legend as "Uptober," traditionally adorned with positive returns in the crypto sphere. During this heralded month, daily trading volume experienced an exhilarating surge, catapulting from a modest $1 billion to an astonishing $2.7 billion on the fateful day of October 15. 

Crypto market volume. Source: DefiLllama

The surge in volume is perceived as a beacon of hope, riding on Bitcoin's enduring history of yielding positive returns during this particular month, faltering merely on three occasions. Interestingly, October 15 stood as a testament, boasting the highest daily trading volume for the entire month. This undeniable phenomenon aligns seamlessly with the robust historical data, positioning October as a statistical stronghold for Bitcoin's price gains.

Bitcoin returns by month. Source: Look Into Bitcoin

Echoing through the corridors of financial history, a resilient October emerges as a vital need, emerging from the shadows of the disheartening third quarter of 2023, which witnessed staggering losses, a whopping $700 million, inflicted by a series of nefarious hacks. The unfortunate tale continued to unfold on the fateful day of October 17, as the Fantom Foundation's hot wallet fell prey to a cyber assailant, resulting in a heart-wrenching loss totaling $550,000 in cryptocurrency.

Bitcoin's prevalence in the market

Behold the reemergence of Bitcoin, donning the mantle of dominance within the crypto kingdom, heralding a momentous anticipation of the impending supply halving, scheduled to grace our presence in April 2024. For the first time since the distant date of June 28, Bitcoin's dominance soared, breaching the illustrious 50% mark when measured against the vast expanse of the entire crypto market capitalization. 

Bitcoin dominance versus crypto market. Source: Coinglass

A familiar pattern unfolds: when Bitcoin dominance finds equilibrium, a euphoric rush toward altcoins and their digital kin becomes the norm. This resurgence in dominance finds strength in Bitcoin models, projecting its potential to scale the lofty heights of $130,000 after the curtain falls on the 2024 halving event.

Liquidations dominate the crypto market today

Ah, the recent crypto market rally, commencing its symphony on the harmonious day of October 16, setting off a cascade of liquidations for short positions across the market. Oh, the spectacle! A grand total eclipsing the $64 million mark, a figure that leaves us in awe, all within the confines of a mere 24-hour span. The champion of this liquidation parade? None other than Bitcoin, with its short liquidations leading the charge. An impressive solo act, a single liquidation standing tall at $2.53 million, a performance held on the illustrious stage of the Binance exchange. 

Bitcoin liquidations. Source: Coinglass

Despite the prevailing streak of losses among short-sellers, we find that 50.9% of the futures market remains in a state of longing, yearning for a favorable twist. This intriguing ratio, skewed toward short positions, sets the stage for a potential short-squeeze, a moment that could breathe further life into the upward trajectory of prices.

Bitcoin short vs. long ratio. Source: Coinglass

Broader influences may favor the cryptocurrency market

Macro factors step into the spotlight, donning a cloak of intrigue, as the Securities and Exchange Commission (SEC) maintains a stoic stance, denying the eagerly anticipated approval of a Bitcoin ETF and engaging in an ongoing struggle against the burgeoning crypto market. Yet, amidst this tempest, substantial institutions continue to cast their gaze upon the crypto cosmos. A testament to this burgeoning interest is witnessed in the unveiling of Ethereum ETFs, a joint venture between VanEck and Bitwise, gracing the world stage on the auspicious date of October 2. The Bitwise ETF, set to unfurl its wings on the Chicago Mercantile Exchange (CME), and the VanEck Ether ETF, poised for a grand launch on the esteemed Chicago Board Options Exchange (CBOE). This burgeoning interest emanating from institutional corridors undeniably lends a buoyant spirit to market sentiment, a spirit buoyed by the 6-point surge in the Bitcoin Fear & Greed Index over the course of a single month.

Bitcoin Fear & Greed Index. Source: Alternative.me

In summation, the landscape of cryptocurrency markets is poised on the cusp of a dance, a dance with volatility. While the delightful display of positive price action in October serves as a delightful short-term jig, the market's response to fresh regulatory overtures or an economic downturn will undoubtedly shape the direction this dance chooses to take. Oh, the anticipation of the enigmatic steps that lie ahead in this market waltz!

Read more: Cryptocurrency Legal Saga: Genesis and FTX